Project Finance by ICICI Bank

Project finance is the long-term financing of infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of its sponsors. Usually, a project financing structure involves a number of equity investors, known as 'sponsors', as well as a 'syndicate' of banks or other lending institutions that provide loans to the operation. They are most commonly non-recourse loans, which are secured by the project assets and paid entirely from project cash flow, rather than from the general assets or creditworthiness of the project sponsors, a decision in part supported by financial modelling. The financing is typically secured by all of the project assets, including the revenue-producing contracts. Project lenders are given a lien on all of these assets and are able to assume control of a project if the project company has difficulties complying with the loan terms. Generally, a special purpose entity is created for each project, thereby shielding other assets owned by a project sponsor from the detrimental effects of a project failure. As a special purpose entity, the project company has no assets other than the project. Capital contribution commitments by the owners of the project company are sometimes necessary to ensure that the project is financially sound or to assure the lenders of the sponsors' commitment. Project finance is often more complicated than alternative financing methods. Traditionally, project financing has been most commonly used in the extractive (mining), transportation, telecommunications industries as well as sports and entertainment venues. Project Finance is one of the key focus areas for ICICI Bank. The Project Finance Group has institutionalized capabilities to successfully manage the unique and multidimensional process of project finance transactions led by customized project structuring approach. The group has been the sole lead arranger and underwriter of a significant amount of project debt over the years. In the Indian project finance domain, the group enjoys a leadership position and is acknowledged for its comprehensive domain expertise and knowledge in the infrastructure, manufacturing and mining sectors, having ensured timely financial closure of several big ticket projects.

A brief overview of the major sectors covered by the group is given below: Power: ICICI Bank is the first Indian bank to finance large hydro-power projects and has been the lead arranger towards funding of a number of thermal power plants being set-up by large infrastructure developers. Roads: The Infrastructure sector is a priority for the Bank. The group has ensured the Bank's participation as lead arranger for a number of road projects and has financed the first project for modernizing state border check posts. Ports / Airports: ICICI Bank has provided assistance to a number of container & liquid port terminals. The Bank has been credited for being a lead arranger for first private sector green field international airport. Manufacturing & Mining: The funding requirements of large brown field expansions and green field projects in the manufacturing sector viz. Steel, Aluminium, Cement, Auto, and Hotels have been arranged by the group. In the mining sector, Bank has provided financial assistance to several large conglomerates for overseas mine acquisitions and has funded capex requirements of local miners.

Oil & Gas: ICICI Bank is credited with being a lead arranger for one of the largest refineries in the country and has financed the first oil securitization deal in the country. Additionally, funding of gas pipeline projects remains a key area for bank. The project finance team of ICICI Bank has also played a key role in assisting the Government of India in formulating policies relating to various segments of the infrastructure sector. This helps ICICI Bank to provide optimum solutions to its clients with an appropriate decision support for strategic measures in future. Service offerings PFG provide a wide range of services including the following:

Rupee term loans Foreign currency term loans External Commercial Borrowings Export Credit Agency backed long term debt Lines of credit from different multilateral institutions Non fund based facilities like Letter of Credit, Bank Guarantee, Suppliers Credit, Buyers Credit etc. Subordinated debt and mezzanine financing

Thus ICICI bank undertakes the above project financing activities.